In past oil shocks, prices moved together.
2008 (oil → $147):
• Massive spike
• Spot vs futures spread: usually < $10
• Market stressed, but coherent
2011–2014 (Arab Spring / Libya):
• Tight supply
• Spread: ~$5–10
• Futures still tracking physical reality
2020 (COVID crash):
• Demand collapse
• WTI went negative
• Financial plumbing broke, but for oversupply, not scarcity
Now:
• Physical oil (Dated Brent): ~$130+
• Front-month futures: ~$95–100
• Spread: $30–35+
“Never has the market seen a disruption of this size.”
— S&P Global / CERAWeek
Looks like:
Another geopolitical oil spike.
Actually:
The pricing mechanism itself is slipping.
What changed?
- Physical market:
• Immediate shortage
• Buyers bidding for real barrels now - Financial market:
• Traders under-positioned
• Volatility → margin risk → smaller bets - Structural mismatch:
• Futures price months out
• Brent doesn’t settle into physical barrels
Result:
Spot = urgency
Futures = hesitation
Historically:
Futures converged to reality.
Now:
They’re expressing less conviction about it.
High signal:
If physical oil is $130 and futures say $100,
the question isn’t “where is oil going?”
It’s:
What exactly is the market pricing anymore?
“Completely halted” trade is the key detail here.
When ~90% of an economy moves by sea, a blockade isn’t just pressure. It's a physical supply shock. (Iran’s seaborne trade)
That’s why oil is trading ~$30 higher in physical markets than in futures right now:
Block the barrels → spot spikes
Uncertainty explodes → futures hesitate